Greece mulls reopening debt buyback invitation-sources

By George Georgiopoulos

Published December 09, 2012

Reuters

ATHENS – Greece may ask for additional offers from bondholders in a debt buyback plan that forms part of its international bailout, Greek officials said on Sunday, but the country's prime minister said the transaction was running smoothly.

The invitation might be renewed on Monday to top up the offers already received, three officials close to the proceedings told Reuters. "It's possible," a senior government official told Reuters on condition of anonymity.

Another government official and a banker confirmed the move was under consideration.

Athens plans to buy back bonds with a face value of about 30 billion euros at deeply discounted prices to lower its debt load. A deadline for bondholders to submit offers expired on Friday. A Greek government official said on Saturday that Athens had received offers of about that sum.

Asked late on Sunday to comment on the success of the buyback, Greek Prime Minister Antonis Samaras said: "the procedure went very well."

"I believe that by Monday or Tuesday, I will be able to say with great certainty that things went very well," he said on a visit to Munich, Germany.

The buyback accounts for about half of a 40-billion euro EU/IMF debt relief package for Athens agreed in November. Its success would help Greece's debt fall to 124 percent of GDP by 2020, ensuring that the IMF stays on board in the rescue.

Greek television station Mega reported earlier on Sunday that Athens was very close to hitting the 30-billion-euro mark and that it would very likely renew the invitation for a short period to collect additional bids from Greek banks on standby to provide them.

By Friday, Greece received offers for at least 15-16 billion euros from foreign investors and about 10-11 billion from Greek banks, Mega said.

Greek banks, which hold about 17 billion euros of bonds, said on Friday they would participate in the deal but did not reveal how many of their bonds they were willing to exchange. Their boards authorised management on Friday to offer up to 100 percent of lenders' bondholdings, if need be.

Greece and its international lenders have shied from setting a binding target for the buyback, apart from saying that Athens should spend at most 10 billion euros on it. Officials told Reuters the aim was to purchase about 30 billion euros of debt, thus reducing Greece's debt load by a net 20 billion euros.

Greek bankers had been reluctant to take part in the scheme, for fear of foregoing future profits on their Greek bonds.

However, they have to make sure it succeeds because they depend on the bailout funds that Athens stands to receive if its bailout continues smoothly.

Almost 24 billion euros from the 34.4 billion euros Greece stands to receive from its lenders later this month will be used to refloat Greek banks, whose capital has been largely depleted by the country's debt crisis.

Another source told Reuters that Greece might have secured additional financing from its lenders for the plan and could be re-opening it to attract additional interest from foreign bondholders.

"In the knowledge that the buyback will succeed, investors might be willing to increase their offers," he said.